The Rideshare Drivers’ Perspective
Harry Campbell, The Rideshare Guy joined Grayson Brulte on The Road to Autonomy podcast to discuss the current state of the rideshare industry from the drivers’ perspective.
The conversation begins with Harry sharing his thoughts on the current state of the rideshare business.
One thing that has defined the rideshare is the shortage of drivers. The shortage on the supply side, and this extends to the macro environment too. Many industries across the board have kind of reported for various reasons that they cannot hire enough workers, and Uber and Lyft have been no stranger to that.
– Harry Campbell
A shortage of drivers is leading to steadily increasing rates for passenger rides. With inflation currently at 8.3% and the average gallon of gas being $4.60 in the United States, the question now becomes is it even profitable for rideshare drivers to drive for Uber and Lyft in this economic environment?
For sure, it’s definitely profitable.
– Harry Campbell
Harry goes onto to break down the economic data that encompasses a rideshare ride for the listeners from both his personal experience and data released by Uber. To achieve profitability, it all comes down to the rideshare drivers’ strategy.
With a potential recession on the horizon, Grayson asks Harry if rideshare drivers are currently preparing for an economic downturn and the impact it could have on their earnings.
Unfortunately, not.
– Harry Campbell
Unfortunately this common throughout the rideshare industry as one of the most popular Uber features for Uber Drivers is Instant Pay. The popularity of the Instant Pay feature is inherently part of a larger overall socioeconomic trend. Planning for a rainy day or building savings is not top of mind for a majority of drivers as they are focused on day-to-day finances. This trend carries over to insurance requirements as certain rideshare drivers do not carry the proper insurance.
If you are interested in learning more about all the facets of the Rideshare business, Harry authored the The Rideshare Guide: Everything You Need to Know about Driving for Uber, Lyft, and Other Ridesharing Companies book which breaks down the rideshare business in great detail.
The business of ridesharing is not currently profitable for operators such as Uber and Lyft. Grayson poses the question to Harry: “Can Uber and Lyft ever become profitable based on the current ways the businesses are structured?” Grayson then asks Harry whether Uber Eats is weighing down the company’s opportunity to achieve profitability.
On a unit economics basis, Uber Eats is dragging down Uber the ride side of the business.
– Harry Campbell
With Uber constantly doubling down on their Eats business, does DoorDash with $4.2 billion of cash on their balance sheet and a market cap of $27 billion make a run and try to acquire Lyft which has a market cap of $6.1 billion to try and compete with Uber? Grayson and Harry discuss the potential for an M&A transaction.
I wouldn’t be shocked if something like that happened in the future.
– Harry Campbell
If this transaction were to happen, how would Uber react? Would this further Uber’s super app push? Harry shares his thoughts on how Uber could potentially counter the move.
Could Uber look to sell Uber Freight which currently operates at a 1% margin to shore up their balance sheet and focus on their core business of rides and delivery?
Wrapping up the conversation, Grayson and Harry discuss the future of the rideshare business and what happens when autonomous vehicles scale globally.
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Recorded on Tuesday, May 31, 2022
